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After this class… You will be able to download the materials from this class on www.afscme.providerprograms.www.afscme.providerprograms You will get a certificate after you submit the quiz at the end. CEU credits vary by state. Contact your local CCPT or AFSCME affiliate office. We are working with crediting agencies to have the workshops approved. Questions on AFSCME programs: Kate Headley kheadley@afscme.org or (202) 429-5092 kheadley@afscme.org

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Record Keeping You may not love record keeping but ….. Keeping good records means big rewards! The better your records, the lower your taxes For every $10 of expenses you claim, you’ll save $3-$4 in taxes

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Want to make more money? Three ways Raise your rates Care for more children Reduce your taxes You’ll earn more per hour doing record keeping, than you’ll earn per hour caring for children

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Three Key Rules of Record Keeping Save all receipts for expenses associated with your home Record all meals and snacks served to the children Track all hours you work in your home

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Track Your Business Income Parents Food Program Subsidy program Grants

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Protect Yourself Record sources of all deposits into your business/personal bank accounts –Spouse’s paycheck, checks from daycare parents, transfers to/from accounts, gifts from mother, etc. Get signed parent receipts at end of year –Keep a copy

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Child Care Tax Credit Most parents can claim the child care tax credit when paying for child care Parents should give providers Form W-10 to obtain provider id# Providers a can give parents Form W-10 and an end-of-year receipt, but are not required to do so

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Employer Identification Number Get an EIN to avoid identity theft Use EIN in place of your Social Security Number www.irs.gov (Search for EIN)www.irs.gov –When asked why you want EIN, enter “Started a New Business” Or call IRS at 800-829-4933

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Track Your Business Expenses Keep “adequate records” of all expenses Mark all receipts Organize your records by category of expense, not by month Save all your business records for at least 3 years

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Food Program Join the Food Program! You are always financially better off You are always eligible for the lower Tier II rate –Can receive higher Tier I rate if you are low income, serve low income children, or live in a low income area Reimbursements for children are taxable –Exception: reimbursements for own child

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Benefits of Food Program Joining the Food Program is like winning the lottery You’ll receive about $500 or $1,000 per child/per year If paperwork for Food Program takes 3 hours a week, you’ll earn about $12.80 or $26.66 per hour (for 4 children)

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Standard Meal Allowance All providers eligible to use this rule Can claim up to 1 breakfast, 1 lunch, 1 supper, and 3 snacks per day/per child Never count meals for own children

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Keep Food Records Keep daily record of all meals and snacks served Use monthly Food Program claim form Track non-reimbursed meals daily on a calendar

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Actual Food Cost Method Estimate your actual food costs Many different methods to use Must keep all food receipts - business and personal

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Three-Step Process for Claiming Expenses 1) Is it Deductible? 2) How Much is Deductible? 3) When Can I Deduct it? (Follow the above 3-step process of all expenses, except the car and food)

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Step One – Is it Deductible? “Ordinary and necessary” for your business Typical, helpful, appropriate, useful Your home is an educational environment for children Parents expect you to maintain your home as a home Expense to clean, maintain, or repair home is probably at least partly deductible

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Step Two – How Much Can I Deduct? 100% personal purposes –No business deduction 100% business use –Deduct 100% of the cost Both business and personal –Use the Time-Space Percentage

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The Time-Space Percentage Number of hours your home is used for business = Time Percent Total number of hours in the year Number of square feet of home used regularly for business = Space Percent Total number of square feet in your home Time Percent X Space Percent = Time-Space Percentage

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Time Percent Count hours When children are present in your home –From when first child arrives until last child leaves When children are not present in your home and you are conducting business activities –Cleaning, activity and meal preparation, parent interviews/calls, record keeping, Internet, etc. –Track these hours for at least 2 months/year

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Counting Hours 11 hours/day caring for children (M-F) = 55 hours/week = 33% of year 14 hours/week business activities when children not present = 8% of year Typical Time Percent = 35-45%

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Space Percent Count rooms that are regularly used for your business “Regular use” means two-three times a week Count basement and garage as part of home Most providers use all rooms in their home on a regular basis